Building a restaurant is expensive. You pour thousands of hours and dollars into your restaurant, and the odds of success for any one restaurant are generally less than 50%. Clearly, you’d have to be insane to get into the restaurant business. BUT – what about those people in every city who seem to launch one successful restaurant after another? How do they manage to beat the odds, time and time again? Are they just lucky? Is it in the power of their name?

The answer is no on both. Luck alone won’t bring you consistent long-term success. It might work once or twice, but steady success takes technique. You think it’s about their name? Think again. That might get people into the restaurant once, but if the restaurant’s no good or the location is terrible or the service is bad, it’s unlikely they’ll be back. And how did they get the reputation in the first place? They can’t rely on a name before anyone knows it.

One of the great secrets of successful restaurateurs is that they test. We’ve all had “brilliant restaurant ideas” at some point. It’s like a book idea. Nearly thinks they’ve got a great one in their minds just waiting for the right moment to come out. Some people act on it, and most fail miserably. The smart people take small steps at first to make sure they have something the world wants. So how can you do that?

Research is King

Before you open a restaurant, you need to figure out if the market’s needs are already being served. If there are already 10 pizza joints in a small neighborhood, you have to ask yourself what you bring to the table that’s not already there – and whether it’s needed. Be brutally honest. This is your time and money we’re talking about. If you have something extremely unique, you need to think about whether the market is big enough for your concept. There’s a reason you don’t see many sushi restaurants in small, rural areas. Although some of the town may appreciate the option, there simply isn’t enough demand for sushi to keep a restaurant in business in some areas.

If you’re not well-versed in this area, consider hiring a consultant to help you craft a restaurant business plan. Although you may spend a couple thousand dollars on the research, it’s worth it if it saves you much more in the long-run. And who knows – your first idea may not prove viable, but you might use that information to come up with something even better.

Think About Risk

If you read many business interviews, you’ve probably heard lots of successful millionaires and billionaires talking about the importance of minimizing your downside. They stay wealthy and they succeed over and over again not because they never fail – but because they protect themselves from huge failures. Failure is a necessary part of success, and nearly everyone successful has a few failures to their name (often more than a few). The important thing is that you figure out ways to minimize risk. Can you lease a space with a good out-clause? If you buy space, maybe you can purchase in an up and coming area so you still retain the value of your real estate if the restaurant fails. Depending on the type of restaurant you’re opening, you may be able to get away with used furniture instead of new. If you’re starting a big budget, high-concept restaurant, perhaps you can take on partners to share the risk.

Do Your Homework

Market research is an important part of creating any new restaurant. Big corporations use focus groups to test almost everything before they spend millions rolling out a new product or brand. You can get the same effect by recruiting people from your local area to help test. Start out with a friendly group – friends, family, possibly co-workers or acquaintances. Get their feedback first, but be aware it’s likely to be kinder and gentler than the general public. Once you’ve gotten the thumbs up from those you know, consider posting an ad or recruiting strangers from your target demographic. They’ll be harsher and more honest if you let them know it’s okay to give you real feedback.

The one caveat is that you have to be careful about the opinions of those close to you. Learn to separate valid criticisms (“This pasta is soggy.”) from emotional ones (‘You shouldn’t open a restaurant; it’s too risky.”). Remember that friends and family tend to want you to have a stable life, not an exceptional one. As a result, many can be unintentionally discouraging when you try to take on new challenges. Don’t let that deter you, but don’t ignore valid concerns, either.

If you do all these things before launching your restaurant, you stand a much better chance of succeeding than most. Experienced restaurateurs know that, and that’s why some are able to succeed time and time again.

]]>http://openarestaurant.net/open-a-restaurant/pre-launch-restaurant-testing-tips/feed/0Should You Open a Restaurant?http://openarestaurant.net/open-a-restaurant/should-you-open-a-restaurant/
http://openarestaurant.net/open-a-restaurant/should-you-open-a-restaurant/#respondWed, 02 Jan 2013 03:37:38 +0000http://openarestaurant.net/?p=14Opening a restaurant is much like writing a book – most people have dreamed about it at some point, few will attempt it, and even fewer are truly cut out for it. Neither one is nearly as easy as pop culture would have us believe. We’ve all seen the glamorous portrayals of young and fashionable restaurant owners, but they almost never show the chaos and incredible stress that goes along with opening a restaurant.

If you’re thinking about opening a restaurant, the first thing to consider is whether you want the reality of a restaurant or the imagined version. Would you still want to open a restaurant if you knew in advance that you wouldn’t make much money? Would you do it if you knew you’d be working long hours and doing grunt work alongside your employees? If not, there’s a good chance you’re not meant for the restaurant business. True, there are celebrity chefs and extremely well-funded high-end restaurants, but very few of us play in that league – and most of those who do paid their dues at some point in their careers.

The next big consideration is whether your area can support the kind of restaurant you want to build. If you’re in a small town in the middle of nowhere, extremely specialized restaurants (gluten-free, vegan, sushi, etc) will most likely face extreme difficulties. You’ll also need to study the micro-environment of your potential restaurant site. Is it well-trafficked? What other businesses are in the area? How’s the parking? In general, your restaurant should fit into the neighborhood. Fine dining rarely works well in between payday loan stores and fried chicken joints. It doesn’t make sense to take a lot of unnecessary risk when you open a restaurant for the first time.

Once you’ve studied your intentions and the target area, you’ve got to start thinking about the money you’ll need to open a restaurant. Do you have the funds to keep going, even if the opening months are rocky? Have you studied the margins on your proposed menu? Do you know how much prices fluctuate on the items you’ll be using most, or are you prepared to re-vamp your menu seasonally to take advantage of items that are most cost effective? How many typical diners will you need each night to break even? Where will your investment money come from? Will you need to hold another job when you open, or do you have a spouse or relative who can cover the bills while you’re working on getting profitable? Whatever you envision, imagine it being worse than you expect, financially speaking. You might be lucky, but it’s better to know what you’ll do if things don’t go smoothly than to be forced to shut down and lose your initial investment.

Finally, before you go any further towards opening a restaurant, you need to get a realistic idea of whether you’re any good. Will you be doing the cooking? If so, it’s a good idea to request brutally honest feedback from friends and acquaintances. Find out what they really think of your food and ask what they’d be willing to pay for it in a restaurant. Get several opinions, especially from people you can count on to be honest. If you really want to market test your food, consider doing some catering jobs, or offer to cook for a local group or nonprofit in exchange for brutally honest feedback. Again, make SURE you let them know you want both positive and negative feedback. It’s better to hear bad things now rather than after you’ve heavily invested and your new restaurant is getting slammed by Yelp reviewers.

If you can get through these steps, there’s a good chance you may have what it takes to open a restaurant. You’ll still have to contend with hiring and management and all the usual restaurant issues, but these things can be learned as you go. The main thing is that you have skills, money, determination, and the right market for your restaurant idea.